Feasibility Analyses

Feasibility analyses are the core element of our approach to Medicare product strategy and development.

We understand the complexities of the Medicare managed care program and the numerous shifting variables that affect plan financial performance.  Our senior consultants use our proprietary financial proforma model to test various assumptions and variables, then forecast revenues and expenses across a three year period.

This study is not meant to replace actuarial pricing; because it’s strategic, it takes into account market considerations and competitive positioning.  Our model allows you to either project profitability given pre-defined member premiums, or solve for the premiums necessary to drive a pre-defined profit margin.  This flexibility allows for comparison of various “what if” scenarios for your plan, so you will have a reliable financial road map to guide your strategic planning and product development efforts.

 View a sample of the GHG Feasibility Model here.*

*assumptions omitted in this sample

 

Benefits of Conducting a Feasibility Analysis

  • Demonstrates the financial opportunity and establishes a solid benchmark for measuring performance.
  • Provides a platform to evaluate various benefit designs.
  • Avoids investment in poorly positioned Medicare products that can’t succeed, potentially saving millions of dollars in startup costs.
  • Provides basis for subsequent mid-course corrections to product assumptions after launch.

What Your Organization Will Be Able to Estimate Using Our Feasibility Analysis:

  • Product Start up costs
  • Break even analysis
  • Enrollment projections by month
  • Revenue by month
  • Medical expenses by month
  • Administrative expenses
  • Monthly profit and loss
  • Cumulative profit and loss
  • Commissions PMPM
  • Annual summary of each of the three years in the analysis
  • Loss ratios and profit marginsPremiums, compared to competitors

Major Assumptions That Can Be Tested Using our Feasibility Analysis Model:

  • Details of enrollment assumptions including estimates of members eligible for program(s) selected, estimate of market share and enrollment growth/disenrollment assumptions.
  • HCC risk score assumptions
  • Part C benchmark for target counties
  • Part C claims assumptions
  • Part C Network Use and Benefit Design Assumptions - including network use, co-payment and deductible adjustments
  • Part D Revenue assumptions, including low-income subsidies, reinsurance above "donut hole," and beneficiary payments and adjustments with maximum TrOOP calculations.
  • Part D Claim assumptions with drug costs and rebates
  • Assumptions about use of rebates (pay drug premium, use for supplemental benefits, etc. )
  • Sales, General and Administrative Costs (SG&A), including commissions, start-up expenses, and Part C and Part D costs
  • County-by-county CMS data for Medicare eligible beneficiaries, average risk score, Parts A and B fee-for-service costs, and Part C benchmarks.
  • Monthly enrollment estimates, including monthly disenrollments and commission per member
  • Monthly Profit and Loss (P&L) estimates for Part C and Part D programs with gross margins and medical loss ratios
  • 3-year summary and monthly proformas
  • 3-year summary PMPMs
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